M/s. Eagle Press Pvt. Ltd. Versus The Asst Commissioner of Income-Tax

2016 (7) TMI 1232 - MADRAS HIGH COURT

Validity of reopening of the assessment - Held that:- Hearing of the appeals has been adjourned to several dates, only on the request of the appellant, despite clear indication by the Tribunal that no further adjournments would be granted. Having regard to the above, this court is not inclined to accept the contention that the appellant, has been denied an opportunity and thus there was violation of principles of natural justice, in passing an ex-parte order.
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Going through the orders impu .....

ing that there was no rectification possible under Section 80-I in the present case, albeit, for reasons somewhat different from those which prevailed with the Tribunal. There being no carry forward of allowable deductions under the head depreciation or development rebate which needed to be absorbed against the income of the current year and, therefore, recomputation of income for the purpose of computing permissible deduction under section 80-I for the new industrial undertaking was not require .....

e following substantial questions of law: 1. Whether in the facts and circumstances of the case, and on the evidence on the record, the order of the Tribunal is not correct in law and perverse in regard to reopening of the assessment in view of: (a) Audit party's opinion in regard to interpretation of the provision of Sec.80IA of the I.T. Act, 1961 is not permissible in law in the light of decision of the Supreme Court in the case of IENS (119 ITR 196 (SC)? (b) the assessment had become fina .....

ee and said assessments had become final? 2. Whether on the facts and circumstances of the case the ITAT was right in its interpretation of Sections 80AB, 80IA/80-IA(7) of the I.T. Act, 1961 in regard to denial of relief u/s 80IA to the appellant? 2. However, vide Order dated 11.07.2007, this court, admitted Tax Case Appeal Nos.881 to 884 of 2007 on the following substantial questions of law: 1. Whether on the facts and circumstances of the case the order of the ITAT is nullity in law in view of .....

3. Whether on the facts and circumstances of the case the ITAT was right in its interpretation of Sections 80AB, 80IA, 80IA(5) and 80IA(7) of the I.T. Act, in regard to denial of relief u/s 80IA to the appellant? 3. The brief facts leading to the filing of the appeals are that M/s.Eagle Press Pvt. Ltd., the appellant herein, is a company registered under the Companies Act, 1957 in 1982, to carry on business in various types of specialised printing. It started a new industrial undertaking by acq .....

ssing Officer issued notice under Section 148 of the Income Tax Act, 1961 in respect of the Assessment Year 1997-98 to 2000-2001 for the purpose of reopening assessment under Section 147, based on audit objections. Assessing Officer, also pointed out that as per the decisions of the Hon'ble Supreme Court in CIT v. P.V.S. Beedies Pvt. Ltd. reported in 237 ITR 13 (SC), reopening of assessment on the basis of the factual error pointed out by Internal Audit Party is permissible under the law. Ob .....

ated 24.07.2003. Further appeals to the Income Tax Appellate Tribunal in ITA Nos.1749 to 1752/Mds/03 were dismissed, by a common order dated 15.11.2006. 4. Perusal of the common order shows that the appeals were listed for hearing on 12.07.2006. Thereafter, it has been adjourned on several occasions on the request of the appellant. Details of which are hereunder: These appeals by the assessee were last fixed for hearing on 12.07.2006. It was specifically stated while granting adjournment that no .....

05, 27.4.06, 6.7.06 and 12.7.06. On all the occasions either assessee prayed for adjournment or chose not to appear. 2. Last when it was fixed for hearing on 19.7.06 a request for adjournment was made which reads as under: The above appeals stands posted for hearing on 19.7.2006. The Petitioner prays for adjournment for the reasons: viz; (a) the counsel who is to represent the appeal is under medical treatment for his tooth severe swelling and was advised medical rest on account of extraction of .....

on judicial resources. Apart from wasting time they cause unnecessary and highly avoidable aggravation. They derail the legal train. Considering the past history of the case and the fact that as per the order of the Tribunal it was made clear that no further adjournment shall be given in the matter, we reject the adjournment application which is filed without any medical certificate and proceed to decide the matter ex parte, qua the assessee, on merits. 4. The first common issue pertains to the .....

he request of the appellant, despite clear indication by the Tribunal that no further adjournments would be granted. Having regard to the above, this court is not inclined to accept the contention that the appellant, has been denied an opportunity and thus there was violation of principles of natural justice, in passing an ex-parte order. In light of the above discussion, the first substantial question of law framed by this court on 11.07.2007 as to, whether on the facts and circumstances of the .....

Nigam Ltd. v. Chairman, CBDT and another reported in 246 ITR 173 (Del). On the facts and circumstances of the case, we reject the said contention of the assessee regarding reassessment. 7. When the Tribunal passed the common order, decision rendered in Velayudhaswamy Spinning Mills (P.) Ltd. v. Assistant Commissioner of Income-tax reported in [2012] 21 taxmann.com 95 (Mad.), was not rendered. However, when the instant tax appeals are heard, attention of this court was brought to the notice of t .....

.2007 and extracted supra, the issue is squarely covered by a decision of this court in Velayudhaswamy Spinning Mills (P.) Ltd. v. Assistant Commissioner of Income-tax reported in [2012] 21 taxmann.com 95 (Mad.), wherein, this court, at paragraph Nos.18 to 23 held as follows: "18. From a reading of the above, it is clear that the eligible business were the only source of income, during the previous year relevant to the initial assessment year and every subsequent assessment years. When the .....

assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. A fiction created in sub-section does not contemplates to bring set off amount notionally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 19. In the present cases, there is no dispu .....

the earlier years. There is a positive profit during the year. The unreported judgment of this court cited supra consdiered the scope of sub-section (6) of section 80-I, which is the corresponding provision of sub-section (5) of section 80-IA. Both are similarly worded and, therefore, we agree entirely with the Division Bench judgment of this court cited supra. In the case of CIT v. Mewar Oil and General Mills Ltd. (No.1)[2004] 271 ITR 311 (Raj); [2004] 186 CTR (Raj) 141, the Rajasthan High Cour .....

e from previous year did not simply arise and on the finding of the fact noticed by the Commissioner of Income-tax (Appeals), which has not been disturbed by the Tribunal and challenged before us, there was no error much less any error apparent on the face of the record which could be rectified. That question would have been germane only if thee would have been carry forward of unabsorbed depreciation and unabsorbed development rebate or any other unabsorbed losses of the previous year arising o .....

ble under Section 80-I in the present case, albeit, for reasons somewhat different from those which prevailed with the Tribunal. There being no carry forward of allowable deductions under the head depreciation or development rebate which needed to be absorbed against the income of the current year and, therefore, recomputation of income for the purpose of computing permissible deduction under section 80-I for the new industrial undertaking was not required in the present case. Accordingly, this .....

unsel appearing for the Revenue is unable to bring to our notice any relevant material or any compelling reason or any contra judgment of other courts to take a different view. He only relied heavily on the Memorandum explaining the provisions in the Finance (No.2) Bill, 1980, [1980] 123 ITR (St.) 154 to support this case and the same reads as follows: "Clause 30(iii). In computing the quantum of 'tax holiday' profits in all cases, taxable income derived from the new industrial unit .....